Where does good financial policy come from? From good data.
That's the message Office of Financial Research (OFR) Director Richard Berner gave to a recent conference. You can't make good policy without good analysis. You can't do good analysis without good data. So: “Success in our work must begin with good data.”
Berner says the industry needs to close data gaps and apply data standards. He mentioned several initiatives currently under way, including work at the Fed and the Legal Entity Identifier.
Commenting on the speech, Steven Lofchie of the Center for Financial Stability says: “Across the entire financial industry, regulators seem to be engaged in a hasty, uncoordinated, and poorly conceived grab for 'useful' information. It is time to slow down, formulate what information would actually be useful, stop collecting useless data, and develop long-range plans, with realistic timetables, as to how to collect the data that can actually be used.”
Yes and no. Efforts in the financial industry could do with more coordination and it's always a good idea to focus on the obviously useful as opposed to the obviously useless. And I'm all for realistic timelines. However, the growing complexity and interconnectedness of the financial system means “usefulness” is an ambiguous quality. Increasingly, one person's noise is another person's signal. Let's prioritize, for sure. Let's not try boil the ocean. But let's also keep our minds open. If the financial industry hadn't regarded so much counterparty data as not “useful”, we'd be in a whole lot better health today. OFR
Comments